Labor lashes out at Shenhua ‘corporate welfare’

Opposition takes aim at government's $262m buyback of Watermark exploration licence


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Opposition takes aim at government's $262m buyback of Watermark exploration licence

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Related: Shenhua advances Watermark mine

SHENHUA should have been sent packing from its Watermark coal project without a cent for their trouble.

That is according to the NSW Opposition, which accused government of splashing out on corporate welfare for the Chinese miner.

NSW Government announced this morning it had reached a deal with the Chinese miner to excise half of the area covered by Shenhua’s exploration licence, reclaiming high value cropping country, including black soil floodplains and in return Shenhua gets a $262 million refund from the original $300m exploration fee.

Labor’s criticism of the government open the party to accusations of hypocrisy, given it was their former Mining Minister Ian Macdonald who granted the company its initial exploration licence (EL) in 2008. The Coalition’s Resources Minister renewed Shenhua’s EL in 2012.

This is grotesque corporate welfare - Adam Searle

But Labor resources spokesman Adam Searle said a special provision in the EL allowed the government of the day to terminate Shenhua’s tenure if development had not commenced within eight years.

“(Shenhua) has had plenty of time to at least make a start. But they have not even applied for a mining lease,” he said.

While the licence conditions empowered government to choose to either accept an application to extend the EL, or not to renew it.

But there was no obligation to compensate the licence holder.

“When you buy an EL, you buy the right to explore for a certain amount of time. Shenhua has had benefit of its EL for more than eight years, what is the government paying them for?,” Mr Searle said.

“This is grotesque corporate welfare when they should be investing in new classrooms and hospitals.”

Labor’s statements today on Watermark are a new position on the controversial project. To date, the party had stopped short of outright opposition, letting the approval process take its course.

Labor leader Luke Foley said today Shenhua must be shut down because “the potential impact to the environment is unacceptable.”

Mr Searle said the government’s buyback sent the wrong message to the corporate sector in NSW.

“It says to private enterprise in NSW that ‘you will never lose any, even if you don’t do any mining. Farmers would be wishing they could get a refund like this for bad seasons.”

NSW Resources Minister Don Harwin hailed the deal a victory for farmers and said mining would now be restricted to ridge lands.

Minister for Primary Industries and Regional Water, Niall Blair, said future mining operations must abide by strict water management conditions Shenhua’s plans have been “exhaustively assessed” by the NSW Aquifer Interference Policy, and will be subject to continual monitoring.

“Today’s agreement unlocks prime agricultural land for farming, helping to maintain the region’s reputation as one of the great food bowls of Australia.”

Chairman of Shenhua Australia Liu Xiang, said the company will continue to progress its Watermark mine on the remainder of exploration licence.

NSW Mining said in a statement agreement will generate 600 new local jobs and economic growth in the region, as well as royalties for the state.

Map shows Shenhua's reduced exploration area.

Map shows Shenhua's reduced exploration area.

Cotton Australia slammed the government’s deal.

"While there is greater protection for agricultural land from this announcement, the reality is that a reduction in the exploration area for the mine will make no difference to the water impacts imposed by the mine,” said Cotton Australia cheif executive Adam Kay.

"Regardless of the reduction in exploration area, farmers on some of the finest soils in NSW will still have an open cut mine in their back yard that will cut through aquifers, intercept water and undoubtedly have negative impacts on water resources and farm productivity."

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